http://www.jewishworldreview.com --
NEW YORK doesn't always keep up with the rest of the country
in periods of prosperity. Back in the early 1990s, for example,
when the economy was moving into recovery, the financial
centre proved disconcertingly slow at adding jobs.

At the time, and later, many suspected that the old model of
financial capital-cum-port might be outdated. After all, the
argument ran, who needs a city to run a fax- or e-business
when it is so much comfier for the family to work out in Napa
Valley, or off the ranch in Montana? Back offices too were said
to be better sited far away, where cheap and educated labour supplies were available.
They couldn't have been more wrong.

First came the rise of Manhattan's "Silicon Alley," proving that lower crime and proximity to a
financial center is also a draw for the modern business model. Since then the boom has
spread to the city's outer boroughs, over to Jersey City on the other side of the Hudson, and
even upstate to Dutchess and Ulster counties, leading the tech world to dub greater New
York "Silicon Alley Valley."

Mark Goloven, regional economist for Chase, notes that upstate New York, which long
suffered from stubborn unemployment, is now seeing strong job growth. A new
multi-company tech center at an old IBM facility is, for example, generating fresh jobs in
Ulster County. In other words, Northern Ireland's software industry will have to continue to
boom if it is to keep up with its namesake.

But the most astounding story remains the city. It had virtually no "new media" jobs as
recently as 1994, now counts more jobs in this category than in the construction industry.

An analysis by the not-for-profit Citizens Budget Commission revealed that New York had
more registered domain names than any other city in the country.

And some of this summer's new numbers reveal that New York is even growing faster than
the rest of the country. The nationwide National Association of Purchasing Managers' key
monthly manufacturing index has, for example shown successive drops every month since
March. New York-specific job data culled by the very-same NAPM shows Gotham still
blasting heavenward. For the period of March to June, the city's manufacturing index
increased 1.7 per cent, before angling upward another 2.2 per cent in July.

An article published this week in the quarterly City Journal* offers some interesting insights
as to why grimy old New York has become such a high-tech star. The first is the valuable
labour supply resulting from heavy immigration. Today a full 40 per cent of New Yorkers are
foreign born, the highest level since 1910. These workers, many of them relatively educated,
have been crucial to New York growth, and even drawing companies that would have
settled elsewhere to the city.

"New York city has a wealth of human capital, supplying us with multinational and diverse
employees," Uruguyan born Fernando Espuelas told the City Journal. After founding Star
Media Network, a provider of internet services to Latinos and Portugese speakers, Mr
Espuelas and his partners moved Star Media to Manhattan from Connecticut.

Another reason for the boom has been the desire for old-fashioned Wall Street or City of
London-style proximity. "If you are 45 minutes from your clients in this industry you get the
business. If you are three hours away, you don't," William Schrader of PSINet told City
Journal.

Given the cliche that today, you can site a business anywhere, it is particularly surprising to
find executives in virtual businesses insisting that they need the presence of a physical
market place. Yet that is what the Silicon Alley model seems to be saying.

There is evidence too that New York's new e-job base may weather downturns better than
new economy firms in other parts of the nation. A PricewaterhouseCoopers study covered
in City Journal showed that more than half of New York's New Media businesses were
already in the black by 1998, a favourable ratio given that many e-businesses this summer
are running on fumes. This though is not to say that New York is invulnerable. The city
would be growing even faster, some observers argue, if not for its heavy tax burden,
ranked in the top ten of the 50 states. New York for example imposes a commercial rent tax
on firms. It is the only city with such a tax in the nation. (DoubleClick will pay about $2.8m in
rent tax over the next 15 years). The best thing the city can do to keep Silicon Alley Valley
shining would be to reduce such
levies.

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